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Thanks to Trump, more US milk will be coming from robots

THE ROBOTS are coming — this time, to a dairy farm near you.

It wasn’t long ago that cow-milking robots were a novelty in the US, but today, automation is showing up on more farms. One of the big factors spurring the trend: more than half of all workers on dairy farms are immigrants, and the Trump Administration’s hardline policy stances are signaling that labor could be even harder to come by. Robots can cut the number of workers on a dairy farm by 50%.

Along with labor worries, cheap credit and improvements in technology are coming together to tip the scales in favor of robotics on dairy farms, said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin, Madison.

“We’ve even had people who’ve worked for years on some farms that left because they’re concerned about being picked up as undocumented,” Stephenson said by phone. “You don’t want to wake up one morning and have a thousand cows to milk and not have the labor to do that.”

Currently, fewer than 5% of US dairy farms use robots. That number will probably increase by 20% to 30% a year for the foreseeable future, according to Chad Huyser, vice-president for North America at Lely, a manufacturer of milking robots based in Pella, Iowa. Globally, robotics for dairy farming is already a $1.6-billion industry, a number that will continue to grow, according to a January report by market researcher IDTechEx.

While early models of robot milkers didn’t work as well, the technology has now become feasible and reliable, Stephenson said. Robots work by attaching equipment to cows’ udders, milking them and cleaning them. In a popular model, cows walk up to a stall to get milked whenever they want, and one robot handles around 60 a day. Mechanization is showing up in other ways, too, with mobile robots pushing feed and cleaning up after animals.

It’s an expensive upgrade. One robotic unit can cost a couple of hundred thousand dollars, said Marcia Endres, a professor of dairy sciences at University of Minnesota who has done economic modeling on robotic milkers. Still, if the machine lasts for about 15 years and if a farmer’s total costs for workers are about $25 to $30 an hour, those that install the technology can expect to break even in the end, she estimated.

“You’re prepaying your labor costs for seven to eight years, depending on the loan you get,” said Chad Kieffer, whose family dairy, Kiefland Holsteins in Utica, Minnesota, reduced labor on the farm by half after adding robotics. They have five robots that milk 300 cows.

With talk of building a wall between Mexico and the US from the White House, and a standoff over immigration in the US Congress recently shutting the government down for three days, there’s fear that the traditional agricultural labor pool of immigrant workers, including undocumented ones, may further dry up. Earlier this month, a dairy farmer in Michigan was sentenced to two years in prison for hiring undocumented immigrants.

Rising costs of labor will also continue to drive farms toward automation, according to Bruce Dehm, whose company Dehm Associates LLC in Geneseo, New York, analyzes the financial performance of dairies. Since workers are harder to come by, they’re asking for higher pay, he said. In New York state, where minimum wages are increasing, Dehm projects labor costs per cow to rise 22% in the five years through 2021.

Cows often like the robot way of life. The animals gain some autonomy and aren’t interrupted by human beings all the time, said Matt Gould, the Philadelphia-based editor for the Dairy & Food Market Analyst newsletter. More natural cow behavior starts to emerge in the herd, for example, they’ll start licking each other.

Josh Folts, owner of Folts Farms LLC, in North Collins, New York, started his dairy farm from scratch two years ago, and has two milking robots that milk 120 cows. It cost him $400,000 to put in, but now, with the help of the robots, the farm produces more milk that’s higher quality than average because the cows are less stressed, he said.

“By having the automation, it does allow us some free time,” Folts said. “We can go out to dinner, my 12-year-old plays hockey and I can make all of his hockey games.”

“The only reason why we don’t have migrant labor is we started out with the robotics, and for that reason we didn’t really have the need,” he said. “We were ahead of the curve as before the election, there was not the scare that people seem to have now.” — Bloomberg

How PSEi member stocks performed — January 31, 2018

Here’s a quick glance at how PSEi stocks fared on Wednesday, January 31, 2018.

Democracy Index 2017

Doing away with unintended gifts

What is it that evokes a childlike delight in us when we receive a gift? Personally, I think it is the absence of any expectation of getting something in return, other than the recipient’s gratitude.

On the flip side, can there be instances of “unintended gifts” or gifts given away without expecting or intending to do so? Yes, there are “unintended gifts” under our tax rules.

This idea of “unintended gifts” is connected to the sale of property (other than real property) in the ordinary course of business. In a regular sale transaction, an exchange of resources will take place and, in an independent or arm’s length deal, the exchange will generally result in a gain on the part of the seller. In most cases, the usual process of selling and buying and its corresponding taxes will be undisturbed.

But what if the tax authorities inform you that apart from selling, you actually carried out a donation?

This situation may happen when the selling price of your property is lower than its fair market value. This will lead to the presumption that the intention of the parties is actually to execute a donation to the extent that fair market value exceeds the selling price.

How is fair market value determined?

In the case of real properties such as land and building used in business, one needs to know the zonal values determined by the Commissioner of Internal Revenue (CIR) and the assessed value from the Provincial/City Assessors. The higher between the two values shall be the value of the property to be used in computing any internal revenue tax as prescribed by Section 6(E) of the Tax Code.

For shares of stock not traded on the stock exchange, the fair market value shall be the adjusted value of all the underlying assets and liabilities of the company. If there are real properties, such shall be valued from the highest among the 1) zonal value determined by the CIR, 2) the assessed value fixed by the City/Municipal Assessors, or 3) the value established by a third party or independent appraiser.

For properties other than real property and shares of stock, our tax authorities have yet to provide specific guidelines on how to account for their fair market values. Conservatively, it would be better to align the price of your property based on the prevailing price of the same/sufficiently similar property in the market.

If property is sold at less than fair market value, the arrangement will be subject to income tax on any gain (which is the difference between the selling price and the cost of acquiring the property) and in addition, a donor’s tax for the supposed gift based on the excess of the fair market value over the selling price as prescribed by Section 100 of the Philippine Tax Code.

Inspired by Article 725 of the Civil Code, for a number of years, the high court emphasized that a transaction cannot be regarded as a donation without its essential elements. One of these elements is the need for the transferor/seller to have an intention to donate during the course of the transaction. The tax authorities have adopted the same principle in several early rulings by exempting from donor’s tax taxpayers who sold their properties below their fair market value without donative intent.

However, in 2014, the Supreme Court ruled that the absence of donative intent does not exempt a taxpayer from donor’s tax. Applying the then Section 100 of the Tax Code (prior to the amendment under the Tax Reform for Acceleration and Inclusion Act “TRAIN”), the amount by which the fair market value of the property exceeded the selling price shall be deemed a gift, even if there is really no intent to give gratuitously. This decision was later on adopted by the Court of Tax Appeals in a 2016 decision when it ruled that the difference in price between the book value and the amount to be paid for the buy-back of shares raised the legal presumption that the transaction was a donation, regardless of the absence of an intention to donate.

With the amendments introduced by the TRAIN effective Jan. 1, 2018, however, the donor’s tax risk has been mitigated with the inclusion of a provision in Section 100 of the Tax Code stating categorically that “a sale, exchange, or other transfer of property made in the ordinary course of business (a transaction which is a bona fide, at arm’s length and free from any donative intent), will be considered as made for an adequate and full consideration in money or money’s worth”.  This is a welcome relief for taxpayers intending to transfer property without any donative intent.

Moreover, under the old rules of the 1997 Tax Code, there was a burdensome tax rate of 30% for donations to strangers and 2% to 15% for gifts to relatives. Starting 2018, the comprehensive tax reform program has also amended the donor’s tax rate to a fixed rate of 6% of the total gifts, regardless of whether this was made to a relative or a stranger. This 6% tax will only apply to gifts in excess of P250,000. The first P250,000 of your total gift  for a given year will be donor’s-tax free.

A donation is a gratuitous act on the part of the giver. There‘s no reason to make the transfer more onerous than it ought to be.

The views or opinions in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Pervis D. Velasco is a senior consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

pervis.d.velasco@ph.pwc.com

Traders eye RBI for support as India bond rout worsens

TRADERS in India’s battered bond market want the central bank to play the role of a savior.

With the market reeling under the worst sell-off in almost two decades, investors say the Reserve Bank of India (RBI) should consider buying support as well as expand the quota limits for global funds. Absent that, they expect the declines to continue.

“To calm the bond market, the supply-demand maths has to fit in; meaning keep fiscal deficit in check and/or find additional demand levers by increasing limits for foreigners or the RBI doing bond purchases,” said Mumbai-based Lakshmi Iyer, the chief investment officer for debt at Kotak Mahindra Asset Management Co., which oversees $19 billion in assets.

The nation’s sovereign bonds are set to decline for the sixth straight month in January, the longest stretch since 2000, amid elevated oil prices and hardening global yields. The yield is seen climbing as high as 8% in the fiscal year starting April 1, a level last seen in 2014, according to ICICI Securities Primary Dealership Ltd. The yield fell one basis point Wednesday to 7.42% as of 9:40 a.m. in Mumbai.

Allowing foreigners to buy more government debt will help absorb a  record supply of bonds, which along with worries over accelerating inflation and wider deficits has spooked the market. Global funds bought 1.4 trillion rupees ($22 billion) of bonds in 2017, the most in four years, and the central bank has said it would raise the cap on overseas investors to 5% of outstanding bonds by March 2018.

Bond purchases will help comfort the market, Bank of America Merrill Lynch said in a note, forecasting $25 billion of such operations in the year starting April 1. It’s not the first time the central bank would have bought debt. In the year ended March 2017, the RBI injected 1.1 trillion rupees in liquidity, helping push down the yield to more than a seven-year low even as the government sold a record amount of debt.

Open market operation purchases “would be the strongest signal” to allay concerns about the spike in yields, Indranil Sen Gupta, BofAML’s India economist wrote in the note.

The rout may lead to 155 billion rupees of mark-to-market losses on the available-for-sale portion of the banks’ investment portfolios in the December quarter, according to ICRA Ltd., a unit of Moody’s Investors Service. The declines prompted state-run lenders to ask the RBI to allow them to spread the losses over two quarters, the Economic Times reported earlier this month. — Bloomberg

Nation at a Glance — (02/01/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Competition alert: Help the United Nations attain its Sustainable Development Goals

How do you develop an idea that can create a sustainable and positive impact in our country? And for those who already have an idea in mind, how do you even start the time and resource‑consuming task of testing it?

World Merit, a global community of millennials dedicated to working on the 17 Sustainable Development Goals (SDGs) adopted by the United Nations General Assembly in its 2030 Agenda for Sustainable Development, and its Philippine chapter, will be mounting Merit360 Philippines, a two‑week program in Bohol this April for interested Filipino youth. These SDGs include alleviating poverty, gender equality, providing quality education and reacting to climate change.

The camp, which will be held from April 9 to 21, will culminate in a chance for you to pitch your action plan to global leaders from various sectors. There will be talks, workshops, travel to various towns in Bohol for community projects, travel to various sites in Bohol just to take in the sights, concerts, a chance to meet new friends— because who says these events have to be boring?

And it doesn’t end after the two‑week camp. You and your newfound friends can continue with a nine‑month online program to further develop your life‑changing ideas. World Merit will also help in testing the chosen action plans for the first four months and hopefully implement these in the next five months.

Applications are open to youth participants aged 18 to 35 years old. Here’s your chance to be one of the 180 participants to join the two week camp and the nine month testing projects.-Lucia Edna P. de Guzman

Hacks for future food business bosses

Now. Do it now,” is a popular advice for starting entrepreneurs. “What do you have to lose?”

But for Center for Culinary Arts alumnus JP Anglo, it’s probably best to get some experience before starting your own food business. Experience, after all, is the best teacher.

“Try out cooking school first,” the tattooed chef told SparkUp after one of his weekend cooking classes with the CCA. “If you can hack cooking school then try working for a restaurant first. Money’s at stake when you open your own business. You have to pay operation costs, construction costs, and your own employees, to name a few.”

He admitted that he was probably too excited when he graduated from CCA in 2003. He built his own Asian restaurant in his home city of Bacolod—planned, cooked, worked and then realized that he wasn’t ready to be his own boss yet. That’s probably a realization best had when you don’t have employees to pay and customers to feed.

He left his restaurant for five years, and went to Australia to study and work part‑time in another restaurant. In 2008, he went back to Bacolod and established Asian restaurant Mushu, which is open until today.

“If you work for someone first then you get to learn while you work,” advised Anglo. “Then you get to realize what you want to do in life, what you want to do, and what your strengths and weaknesses are.” And for our good chef that’s running his own restaurant, teaching the youth how to cook, and starring in his own cable program this March.

These days, Chef Anglo teaches open‑to‑the‑public weekend cooking classes at the CCA. Last December, he taught participants to cook indulgent Noche Buena meals and in January he taught participants how to cook relatively healthier meals for the New Years, less pork and sugar and more chicken and seafood.

He is certainly a hands‑on teacher, making rounds in the kitchen and offering advice on how to improve the dishes so that they’d come out as a balanced meal. Balance is his key lesson, as well as improvisation. Cooking is taught as an art, and not a science, leaving room for interpretation in his recipes. At the end of the day, no group will serve exactly the same dish, but they will definitely all be delicious. (Word of advice though, keep your kitchen station clean at all times. All times.)

These lessons are a whole‑day affair. The CCA chefs demonstrate how to cook in the morning, the participants start cooking after lunch, and they have to have a five course meal plated and ready by six in the evening to serve to their guests.

“There are three parts to these lessons,” said Anglo. “You learn, you do, and then you serve. Pausing for a while, the chef added: “then you enjoy.”

“This is not your traditional cooking class. We’re very go with the flow. We don’t follow any system and we act like you really would in a kitchen where you have to learn how to make diskarte, the chef said on how his lessons are conducted. (But seriously, this is not an excuse to have a messy kitchen station. Don’t tempt fate, just trust me on this one.)

“Free up one Saturday for yourself next month so you can join us at CCA Makati.” While the class has its share of CCA students and alumni, there are also your fellow weekend warriors—millennials who dedicate the weekend to learning new skills. Everyone is grouped together in a way that will allow you to learn from your fellow participants too.

For February, the CCA will hold its cooking class in its Makati campus on a Saturday. The registration fee and main theme is still being discussed, because that would vary depending on the recipes and ingredients needed for that meal, but it will most likely be Valentine‑related.

Announcements for future weekend cooking classes will be posted on CCA’s Facebook page.

SM City Marikina: A Benchmark of Resilience

SM PRIME Holdings, Inc. (SMPH), known as one of the largest integrated property developers in Southeast Asia, opened the doors of SM City Marikina in 2008. A year after it started operations, its resilience was put to a test.

Typhoon Ondoy Experience

In September 2009, Tropical Storm Ondoy (international name: Ketsana) affected 4.8 million people in the country — leaving 464 dead and P11 billion worth of damage in infrastructure. It particularly battered Luzon, leaving cities in Metro Manila submerged in flood. One of those cities severely affected was Marikina City, which witnessed widespread flood like no one has seen before.

Amid barangays sunk in rooftop-deep flood, SM City Marikina remained standing despite being situated within the flood-prone Marikina River Watershed. Marikina River’s water rose to 23 meters during the peak of the storm in comparison to its normal depth of 13 meters.

Science-based Resilient Design

The mall was able to withstand this extraordinary act of nature because it was built on the foundation of resilience. Backed with scientific study, the six-hectare property was designed to sit atop cylindrical stilts without wall enclosures. This design concept enabled the rush of flood water to just pass through the stilts during the typhoon, and prevented damage to the property.

This design is consistent with SMPH Chairman of the Executive Committee Hans T. Sy’s firm belief that building disaster-resilient properties is an investment, especially that the Philippines experience an average of 20 typhoons a year.

“SM considered even the hundred-year flood cycle of Marikina watershed in designing these facilities alongside specialists and local authorities. SM built the mall an additional 20 meters farther than the required 90 meters from the Marikina River to minimize the potential damage of the property. The roads surrounding the mall lay on natural ground level, thus, SM constructed the lower parking level without walls or enclosures, allowing the water to pass through. The upper parking level and the main mall area rests on an elevation of 20.5 meters and operates safely even on times of extreme flood,” Mr. Sy, who is also a member of the UN Office for Risk Reduction’s (UNISDR) Private Sector Alliance for Disaster Resilient Societies (ARISE), said.

Advancing Disaster Resilience

Having a disaster-resilient mall matched with trained employees on disaster preparedness enabled SM City Marikina to immediately respond to the needs of the community. Without stopping its operations, the mall kept its doors open for those seeking help during the three-day peak of Typhoon Ondoy. More than 3,000 individuals took shelter within the mall’s complex; 1,400 of which camped inside the mall building, while the others had their cars safely parked within the vicinity.

Within those days, SM City Marikina distributed food, water, and blankets to those who camped within the mall complex. Moreover, the mall’s staff called on volunteers to address the medical needs of distressed evacuees. SM City Marikina also became one of the driving force behind the city’s bayanihan spirit as local government units and other volunteers partnered with them in order to distribute relief goods in badly hit communities.

Marikina City Vice Mayor Jose Fabian Cadiz told BusinessWorld, “SM played an important role in saving Marikina. It became a refuge for Marikeños because it remained open during the height of Typhoon Ketsana. Several thousands sought refuge here, and they were even given food and water. The supermarket remained open, and the prices of basic commodities remained the same. It paid that the building was disaster-resilient.”

SM Prime allocates 10% of capital expenditure for disaster risk reduction in construction of buildings. By investing in resilience, we minimize vulnerability, better safeguard physical assets, reduce recovery expense, and contribute to local government efforts. Ultimately, we are able to better protect lives, and have safer, healthier, and happier communities. — Hans T. Sy

Replicating the new model for resilient structures

Having withstood the catastrophic level of Typhoon Ondoy, SM City Marikina then became a benchmark of resiliency in their city. Establishments being built post-Ondoy have been modelled after the stilt design of the mall.

“SM City Marikina helped us a lot in designing our buildings after Ondoy,” Vice Mayor Cadiz shared. Within the Marikina City Hall complex, the trade center, and the newly built legislative building were built on stilts. Just outside the complex, Sta. Elena High School also adopted the same design concept.

“We passed an ordinance in 2015 stating that in low-lying areas, houses must be built on stilts. SM City Marikina building was, is, and will be our inspiration,” Vice Mayor Cadiz continued.

As a way to continue its advocacy and vision for building sustainable communities, SM City Marikina is working hand in hand with the local government to regularly conduct seminars regarding disaster resiliency.

The Global Perspective

As the world continues to face the pressing effects of climate change, SMPH takes a proactive role in making sure to relentlessly adapt innovative ways to make their properties resilient and sustainable. This, in return, helps in safeguarding the communities where SMPH operates in, and even inspires other global thought leaders to invest in resilience.

During his speech in Cancun Mexico, Mr. Sy said, “SM Prime allocates 10% of capital expenditure for disaster risk reduction in construction of buildings. By investing in resilience, we minimize vulnerability, better safeguard physical assets, reduce recovery expense and contribute to local government efforts. Ultimately, we are able to better protect lives, and have safer, healthier, and happier communities.”

Resiliency and sustainability as the core philosophy of SMPH was not only recognized locally but also globally. During the UNISDR Global Platform in 2013 in Geneva, Switzerland, Hans T. Sy presented the SM City Marikina’s case study as a model for resilience. From hereon, the UNISDR invited Hans T. Sy to be the only Filipino Board Member of the United Nations International Strategy for Disaster Reduction Office for Risk Reduction’s Private Sector Alliance for Disaster Resilient Societies (UNISDR ARISE) as a way to bring the Filipino voice in the international stage.

In 2017, Hans T. Sy was invited to present the SM City Marikina case study to the Global Platform for Disaster Risk Reduction (DRR) in Cancun. With SMPH, Mr. Sy supported the founding of the Philippines’ National Resilience Council (NRC), a science and technology-based public-private partnership for climate and disaster resilience engaging the government, private sector, academia and civil society, where Mr. Sy also serves as the Private Sector Co-Chair.

A call to action towards securing the future

Addressing the United Nations (UN) General Assembly in 1987, then Norwegian Prime Minister Gro Harlem Brundtland, head of the Brundtland Commission, put it best. 

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs,” he said.

The Brundtland Commission, which was established by the UN to preserve and protect the environment, its natural resources, as well as prevent the deterioration of economic and social development, called on the nations of the world to enact policies aimed at sustainable and environmentally sound development around the world. Sustainability, it asserted, should become the central guiding principle of governments, organizations and institutions worldwide.

Since the sparks of the Industrial Revolution had ignited the flames of a consumerist way of life, much of the world’s economy relied, and still relies, on unsustainable practices regarding the use of resources. Harmful gas emissions from factories and large-scale mining operations, for instance, have quickened the pace of climate change, inducing global warming which in turn is melting the Earth’s ice caps, raising the level of the oceans, and endangering the world’s coastal cities.

But because such practices are so deeply rooted in the lifestyle of the modern world — not to mention the fact that they are very profitable for those practicing them — the pursuit of sustainable development has been fraught with challenges. 

In the words of Alan Young, Chairman of the Board of the International Institute for Sustainable Development, in the organization’s annual report for 2016-2017, last year: “Last year proved to be rather remarkable, and yes, rather sobering”.

“We experienced a collective whiplash effect in moving from the optimism inspired by the progressive agreements leading to the Paris Agreement and the Sustainable Development Goals, to the largely unanticipated success of populist campaigns, which have challenged the core principles of multilateralism and environmental protection — not to mention evidence-based, rational discourse as a basis for public policy,” he wrote.

“Ironically, while our potential to achieve truly sustainable and innovative economies and communities has never been more closely within reach, the opponents to such change have managed a surge in power that, if unchecked, will set that progress back at a crucially sensitive moment,” he added.

The Paris Agreement is an international pact signed in 2016 within the United Nations Framework Convention on Climate Change aiming to respond to climate change. United States (US) President Donald Trump withdrew the US from the agreement, saying a withdrawal would help American businesses and workers.

Sustainability, however, is not solely concerned with the environment. Peace, human rights, equitable wealth distribution, and economic stability are all goals that fall under the umbrella of sustainable development.

The Sustainable Development Goals (SDGs), also known as “Transforming our World: the 2030 Agenda for Sustainable Development”, are 17 global goals set by the UN, developed to replace the Millennium Development Goals which ended in 2015. The UN Development Programme (UNDP) Philippines defined them as a “universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity”.

“The SDGs work in the spirit of partnership and pragmatism to make the right choices now to improve life, in a sustainable way, for future generations. They provide clear guidelines and targets for all countries to adopt in accordance with their own priorities and the environmental challenges of the world at large,” the UNDP said in its Web site.

Covering a broad range of social and economic development issues, the SDGs aim to tackle sustainable development through addressing of issues like poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, environment and social justice.

The pursuit of these goals, in short, is worthwhile. In the past, the Philippine government has partnered with the UN with the goal of pursuing sustainable growth in the country.

Cooperation is the solution. Towards reducing poverty, the UNDP aims to involve more stakeholders in the development process through innovative public-private partnerships for local and sustainable development. The organization also works with the government and civil society partners in promoting an enabling policy environment for peace and other goals.

“UNDP provides support to governments to integrate the SDGs into their national development plans and policies. This work is already underway, as we support many countries in accelerating progress already achieved under the Millennium Development Goals. Our track record working across multiple goals provides us with a valuable experience and proven policy expertise to ensure we all reach the targets set out in the SDGs by 2030. But we cannot do this alone,” the UNDP said.

“Achieving the SDGs requires the partnership of governments, private sector, civil society and citizens alike to make sure we leave a better planet for future generations,” it added. — Bjorn Biel M. Beltran

Sustainability champions

Sustainable practices have been shown time and again to improve financial performance and relationships with critical stakeholders, and help create significant positive environmental and social impact. Many of the largest Philippine companies have enthusiastically adopted and committed to them, setting a great example in their respective industries. Here are several of them.

A property giant that owns and operates the famous chain of SM shopping malls as well as a number of residential and office buildings, SM Prime Holdings, Inc. has been putting out sustainability reports since 2007, outlining its practices, goals and impact. “As one of the largest property developers in Southeast Asia and with a presence extending across the many regions of the Philippines, SM Prime is aware of the environmental and social impact of its operations. Our long-term success depends on having a positive impact in these areas and our goal is to be a catalyst for development in the communities we serve,” Jeffrey C. Lim, president of SM Prime, said in the company’s 2016 sustainability report.

The company, he noted, had addressed issues that contributed to its environmental footprint, such as those concerning energy efficiency and water consumption. In 2016, for instance, roughly 5,800 megawatts of renewable energy was generated by SM Prime across its installations in the Philippines and China. That amount of energy, Mr. Lim pointed out, could power over 5.8 million homes. Also that year, SM Prime recycled 33% of water it consumed; 4.7 million cubic meters of water, which could fill almost 2,000 Olympic-sized swimming pools, was reused in cooling towers and comfort rooms.

Efficient use of water is where Nestlé Philippines shines. The food and beverage company has equipped all its factories with world-class wastewater treatment facilities. “Manned by highly competent personnel, these treatment plants capture every drop of wastewater discharged from the factories, cleanse the water of impurities, and release it to natural waterways clean enough to sustain marine life,” the company says on its Web site. It adds that the treated water from the factories is tested constantly to meet government standards.

But Nestlé has also explored other ways to optimize water use. For example, it reuses sealing water from vacuum pumps, cooling water from MILO processing, rinsing water and recovered water from reverse osmosis plants. “These initiatives, coupled with simple techniques as the use of sensor-operated faucets that ensure automatic stoppage of water flow, have cut down water consumption throughout Nestlé by about 16% since 1997, or an average of 65,500 cubic meters of water every year,” the company says.

Globe Telecom sees environmental sustainability as its immediate responsibility, in the face of global warming and rising demand for energy, and in response to two of United Nations’ Sustainable Development Goals — responsible consumption and production and climate action. In 2016, the communication services provider invested P2.37 million in environmental protection initiatives, including reforestation programs, solid waste management and hazardous waste disposal and treatment. In addition, it donated P1.4 million as initial grant for 13,500 seedlings to the nonprofit Hineleban Foundation, which advocates environmental conservation and livelihood development.

“Having an expansive network also translates to a large business footprint so it is inevitable for us to recognize our responsibility to mitigate effects of climate change,” Ernest L. Cu, president and chief executive officer of Globe Telecom, said in the company’s 2016 annual report. “We continue to invest in a low-carbon future by encouraging more customers to shift to paperless billing to reduce waste, as well as raise public awareness on adopting lifestyles that are in harmony with nature,” he added. As part of that paperless billing initiative, the company introduced Bill via Text through GlobeMYBILL, which allows a customer to receive a text message from it with a link to his or her latest billing statement online.

In favor of sustainable brands

In recent years, sustainable development has become a crucial factor for consumers — especially the most dominant generation today, the millennials. They have distinct values, behavior and habits when it comes to earning and spending.

On average, millennials — more than other generations — spend more on comforts and conveniences. They most likely spend their money for pricey coffee, clothes, and restaurants, and out of town trips. Despite of this, one good thing about this generation is their strong affinity with sustainable products and services.

According to The Sustainability Imperative report by a global measurement and data analytics company, Nielsen, consumer brands that demonstrate commitment to sustainability outperform those that don’t. It says that consumers are trying to be responsible citizens of the world, and they expect the same from corporations.

As noted in the report, sales of consumer goods from brands with a demonstrated commitment to sustainability in 2015 have grown three times higher than those without. In fact, 66% of consumers said that they are willing to pay more for sustainable brands, 20% higher than the previous year.

“Consumer brands that haven’t embraced sustainability are at risk on many fronts,” Carol Gstalder, senior vice-president of Nielsen Reputation & Public Relations Solutions, said in the report. “Social responsibility is a critical part of proactive reputation management. And companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners, and most of all consumers.”

According to the same report, millennials are the most willing group to pay extra for sustainable offerings. This finding was concluded after more than 30,000 online consumers from 60 countries were polled. Next to millennials, generation Z and baby boomers are the generations who are willing to pay more for products and services that come from companies committed to positive social and environmental impact.

“Brands that establish a reputation for environmental stewardship among today’s youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending millennials of tomorrow, too,” Grace Farraj, senior vice-president of Nielsen Public Development & Sustainability, said.

Globally, based on the 2015 Nielsen Global Corporate Sustainability Report, the inclination among Filipinos that buy socially responsible brands is among the strongest. It is noted that 83% of Filipinos said that they are willing to pay more for sustainable brands, a remarkable four point increase from the previous year.

“Sustainability is a worldwide concern and this is especially true for consumers in a growing population such as the Philippines to be continually aware of environmental and societal issues,” Stuart Jamieson, managing director of Nielsen in the Philippines, said. “More exposed to the stress in the environment and its effect to the community, consumers are trying to be responsible citizens and they expect the same from corporations.”

Mr. Jamieson said that these consumers are doing their purchase responsibly — they are checking the labels before buying, they are looking at Web sites for information on business and manufacturing practices, and they are paying closer attention to public opinion on specific brands in the news or on social media. — Mark Louis F. Ferrolino

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